NZ 2018 GDP likely to bolster case for loose monetary policy
quarter-on-quarter poll data
year-on-year poll data
* Slow growth seen curbing inflation; rate cut expectations
By Swati Pandey
SYDNEY, March 18 (Reuters) - New Zealand's economy likely
gathered steam last quarter although annual growth is expected
to have slowed further, a Reuters poll of 11 economists showed,
reinforcing the case for monetary policy to remain
Data due Thursday is forecast to show New Zealand's gross
domestic product (GDP) expanded 0.6 percent in the three months
to the end of December, double the previous quarter's 0.3
percent. However, the expected acceleration in the quarter would
still fall short of the Reserve Bank of New Zealand's (RBNZ)
prediction for 0.7 percent growth.
Singapore-based TD Securities, which is forecasting a brisk
1 percent quarterly pace, says strong household consumption and
government and investment spending likely provided a boost last
quarter while trade made a small contribution.
Construction had been robust too, led by a surprising lift
in non-residential activity particularly in Auckland and
Waikato, economists said.
Most analysts, however, focused on an expected slowdown in
annual growth, saying such an outcome would add to the case for
a policy rate cut from current record lows of 1.75 percent.
On an annual basis, New Zealand's NZ$291 billion
economy($199 billion) likely grew just 2.4 percent last quarter,
according to the Reuters survey, from 2.6 percent in the
September quarter. Annual average growth is also seen easing to
2.8 percent from 3.0 percent previously.
"In this environment, we think inflationary pressures will
lack the oomph required to maintain core inflation close to the
RBNZ's 2 percent target midpoint, with capacity pressures
expected to wane," ANZ economists said in a note.
"We expect it will take some time before growth headwinds
make themselves felt in core inflation indicators, which is why
we have pencilled in the first (rate) cut for November."
Most economists pointed to soft manufacturing activity while
easing net migration also played a part.
For the current quarter one possible hit to growth could
come from any impact last week's mass shooting in Christchurch
has on tourism in a country known as a safe destination for
visitors. The attack killed 50 people in two mosques.
"I think there will probably be some immediate impact on
tourist arrivals," said Sharon Zollner, Auckland-based chief
economist at ANZ.
"There will be a near-term impact, it's hard to say how long
that might last."
Separately, Statistics New Zealand will release fourth
quarter balance of payment figures on Wednesday with seven
economists expecting the current account deficit to widen
further to NZ$11.35 billion.
($1 = 1.4613 New Zealand dollars)
(Reporting by Swati Pandey; Editing by Sam Holmes)
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